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The Supreme Court of Canada has released its long-awaited decision in Barrie Public Utilities v. Canadian Cable Television Association .1  The Supreme Court upheld the decision of the Federal Court of Appeal, which ruled that the CRTC had no jurisdiction to regulate telephone or cable company attachments to utility poles owned by local electricity distribution companies in Ontario.

The case started in 1996, when the cable companies and a number of Ontario local electricity distribution companies ("LDCs") could not reach agreement on the terms of renewal of their joint use agreements.  Historically, in these contracts, the terms of access by cable companies to the poles, including the rental rate, were established through negotiation.  The LDCs considered that the old rate had been set in a very different environment and did not allow the costs associated with accommodating the attachments of other service providers to be properly recovered.

The cable companies, represented by the Canadian Cable Television Association ("CCTA"), applied to the Canadian Radio-television and Telecommunications Commission ("CRTC") to set the rate.  They contended that section 43(5) of the Telecommunications Act, which gave the CRTC the authority to grant service providers access to support structures of a "transmission line," permitted the CRTC to grant the cable companies access to the LDCs' poles and to fix the rental rate.

The LDCs objected to the CRTC's authority to intervene, contending that the term "transmission line," properly interpreted, did not include LDC distribution lines and that, if it did, the provision was unconstitutional as it exceeded the jurisdiction of the federal Parliament.

The CRTC asserted jurisdiction and fixed a rental rate, which was considered by the LDCs to constitute a subsidized rate.  The utilities, with the assistance of the Municipal Electric Association (now Electricity Distributors Association or EDA), appealed to the Federal Court of Appeal.  The Federal Court of Appeal agreed with the LDCs that section 43(5) of the Telecommunications Act dealt only with telecommunications transmission lines and did not authorize the CRTC to grant access to the LDC owned poles, and overturned the CRTC decision.

The CCTA sought, and obtained, leave to appeal to the Supreme Court of Canada.  The LDCs, represented by Ogilvy Renault, opposed the appeal.  The CCTA was supported by the Attorney General of Canada and several telecommunications companies which obtained leave to intervene in the case.  Intervening in support of the LDCs were seven provincial attorneys general and the Federation of Canadian Municipalities.  The case was argued on February 19, 2003.

On May 16, 2003, the Supreme Court dismissed the appeal of the CCTA and affirmed the decision of the Federal Court of Appeal.  Writing for the majority in a 6 1 decision, Mr. Justice Gonthier concluded that the words "transmission line" did not include electricity distribution lines owned by the LDCs and that the CRTC therefore did not have the necessary statutory authority to make the order it did.  Among the many reasons cited by Mr. Justice Gonthier was his observation that "Parliament should be taken to know the distinction between transmission and distribution lines."

Because the Court ruled against the CCTA on the interpretation question, the Court did not have to consider the constitutional question.

The Barrie Public Utilities case is also noteworthy for the Court's discussion of the standard of judicial review of a decision of the CRTC.  The courts generally defer to administrative bodies with specialized expertise, such as the CRTC, and only interfere in cases where the decision of the tribunal is unreasonable.  The CCTA had argued that, applying this "reasonableness" standard, the Court should not substitute its interpretation for the interpretation adopted by the CRTC.  The Court disagreed, noting that the question of interpretation of the statute in issue in this case did not require the application of any technical expertise and that the higher "correctness" standard of review should therefore be applied.

The next step would seem to be for the LCDs and the cable companies to return to the bargaining table, although there have been suggestions that the CCTA may lobby the federal government to change the legislation to expressly give the CRTC the power to set the rental rate.  If the federal government were to do so, the case could yet get back to the Supreme Court of Canada on the constitutional question, which the Court did not have to consider this time around.

If the federal government does not extend the CRTC's jurisdiction and the parties cannot arrive at mutually agreeable terms, the matter could end up before the Ontario Energy Board ("OEB") on the basis that the rental rate could be considered a rate or a charge which is within the jurisdiction of the OEB to regulate.

OUR ENERGIE LAW PRACTICE

Ogilvy Renault has a diversified energy practice and regularly represents Ontario's distribution utilities and other industry participants in a wide variety of regulatory, corporate, commercial, government relations and litigation mandates.

1. 2003 SCC 28 (downloadable from www.lexum.umontreal.ca/csc-scc/en/rec).

The purpose of this document is to provide information as to developments in the law. It does not contain a full analysis of the law nor does it constitute an opinion of Ogilvy Renault or any member of the Firm on the points of law discussed.

©OGILVY RENAULT 2003 - All Rights Reserved

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